Tech Fees For Stolen Technology?

You call it the tech fee. Here in Brazil, it's a royalty. But whatever you call it, Monsanto wants money for its Roundup Ready soybean technology. The company pulled out — at least for now — of the biotech soybean business in Argentina because it was unable to get its tech fee. But Brazil is a larger market and — even though the federal government has not settled the Roundup Ready soybean situation yet — the company is pushing hard to get paid.

It is a problem because the Brazilian government has not yet passed a new law to regulate biotechnology overall. As a result, Brazilian President Luiz Inÿcio Lula da Silva has issued a number of temporary decrees allowing for the planting and sale of contraband biotech soybeans — but only for saved seed (although it appears this year's decree allows companies to multiply seed). So how does a company charge a tech fee for the, well, stolen, use of its technology?

That is the question facing Monsanto in Brazil, where it's gradually implementing a program to charge back a fee for the use of its technology, working with producer associations and other groups.

According to unofficial estimates, about 98% of farmers in Rio Grande do Sul have planted biotech soybeans, mostly using Roundup Ready seed smuggled from Argentina.

The company is negotiating with farmer associations to try and reach a private agreement on the amount and method of payment.

The issue has already reached at least one Brazilian federal court in Rio Grande do Sul state. On January 21 a judge decided the town's Triticola Mista co-op should pay for use of intellectual property relating to the 2005 Roundup Ready soybean harvest. The judge also established the rate of $1.20 (Real) per 132-lb. bag, equivalent to about 64¢/bu., but he told the co-op to deposit the amount in escrow to await a final decision on the case rather than paying Monsanto.

The 64¢/bu. royalty (tech fee) is the key issue right now. Farsul, the Rio Grande do Sul Agricultural Federation, decided it would continue negotiating with biotech seed producers over the royalty. Farmers there did pay royalties to Monsanto for the 2003-2004 harvest, at the rate of 32¢/bu. — half what the company is asking for this season.

“Since Monsanto cannot sell its seed, it will collect (its tech fee) in the (movement of the) soybeans, as it did in the last planting season,” says Monsanto-Brazil communications director Lucio Mocsanyi. However, he would not comment on what sort of tech fee the company might get, in view of ongoing negotiations.

The company intends to “implement a system that can be applied in the whole country in order that the collection for the utilization of our technology is fair to all the participants in the ag chain,” Mocsanyi adds. He lists the states of Rio Grande do Sul, Santa Catarina, Bahia, Maranhão, Tocantins and Piaui as immediate targets for implementation of a tech fee collection system.

As for the future, Edison Ponte, a farmer from southern Brazil, says, “I'd rather see the extra cost included in the original seed price, and not as royalties payable after harvest. Brazilian farmers are already bogged down by so many taxes they will look at a separate biotech fee as still another tax imposed by Brasilia. Also, it would be a specific and separate financial operation, thus incurring in additional banking tax, service VAT, etc.”

Nevertheless, he says, “If you want to profit from the benefits that technology brings, you should also be prepared to pay for it. A fee or surcharge is only fair, and if farmers in our state see it included in the price of seeds they will quickly learn to operate accordingly. This is a very straightforward matter.”

This is the larger picture in Brazil right now, a wait-and-see game in which farmers must cope with the two big Rs.